A new study published by the National Council on Compensation Insurance (NCCI) found that market consolidations — including horizontal integrations such as hospital mergers and vertical integrations like health systems’ acquisitions of provider groups — don’t do anything to reduce the costs that American healthcare consumers face.
Rather, they accomplish the opposite: they drive healthcare costs up.
Although hospital mergers typically boost economies of scale and result in other cost-reducing efficiencies, they don’t correspond to reductions in price, the group found. Instead, consumers are left with less provider choice, which in turn drives the price of healthcare higher.
NCCI’s research showed that healthcare costs rise 6% to 18% following most hospital mergers.
“Advocates of hospital mergers, particularly the merging hospitals themselves, emphasize efficiency and scale advantages,” the group wrote. “However, research to date on completed hospital mergers has yet to demonstrate the benefits of consolidation via improved quality, access, and cost.”
Mergers, they asserted, have “been found to reduce hospital costs per risk-adjusted discharge, but not to reduce the price of hospital care to insurers.”